<PAGE>

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1999

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from              to

Commission file number 0-22300

                        PW PREFERRED YIELD FUND II, L.P.
                        --------------------------------
             (Exact name of registrant as specified in its charter)

                       DELAWARE                              84-1180783
                (State of organization)                     (IRS Employer
                                                         Identification No.)

                    88 BROAD STREET
                 BOSTON, MASSACHUSETTS                          02110
                 (Address of principal                       (Zip Code)
                  executive offices)





        Registrant's telephone number, including area code (617)854-5800

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No .


<PAGE>


                        PW PREFERRED YIELD FUND II, L.P.
                      QUARTERLY REPORT ON FORM 10-Q FOR THE
                        QUARTER ENDED SEPTEMBER 30, 1999

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                      Page
                                                                                                                      ----
<S>               <C>                                                                                                 <C>
PART I.           FINANCIAL INFORMATION

                  Item 1.           Financial Statements

                                    Balance Sheets - September 30, 1999 and December 31,
                                    1998 (unaudited)                                                                     3

                                    Statements of Income for the three months ended
                                    September 30, 1999 and 1998 (unaudited)                                              4

                                    Statements of Income for the nine months ended
                                    September 30, 1999 and 1998 (unaudited)                                              5

                                    Statements of Partners' Equity for the nine
                                    months ended September 30, 1999 and 1998 (unaudited)                                 6

                                    Statements of Cash Flows for the nine months
                                    ended September 30, 1999 and 1998 (unaudited)                                        7

                                    Notes to Financial Statements (unaudited)                                          8-9

                  Item 2.           Management's Discussion and Analysis of Financial
                                    Condition and Results of Operations                                              10-13

PART II.          OTHER INFORMATION

                  Item 1.           Legal Proceedings                                                                   14

                  Item 5.           Other Information                                                                   14

                  Item 6.           Exhibits and Reports on Form 8-K                                                    14

                                    Signatures                                                                          15
</TABLE>



                                       2


<PAGE>


PART I. FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS

                        PW PREFERRED YIELD FUND II, L.P.

                                 BALANCE SHEETS
                    SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                   (UNAUDITED)

<TABLE>
<CAPTION>


                                                                                          SEPTEMBER 30,     DECEMBER 31,
                                                                                              1999              1998
                                                                                       ----------------     ----------

                                                           ASSETS

<S>                                                                                    <C>                  <C>
Cash and cash equivalents                                                              $      1,547,448     $     3,629,653
Rents and other receivables, net of allowance for
   doubtful accounts of $47,000                                                                 719,373             558,579
Equipment at cost, net of accumulated depreciation of
   $12,805,559 and $18,645,275 at September 30, 1999 and
   December 31, 1998, respectively                                                           10,266,440           9,863,976
                                                                                       ----------------     ---------------

              Total Assets                                                             $     12,533,261     $    14,052,208
                                                                                       ----------------     ---------------
                                                                                       ----------------     ---------------




                                              LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
   Accounts payable and accrued liabilities                                            $         45,450     $        32,500
   Payable to affiliates                                                                        106,893             109,562
   Deferred rental income                                                                       113,948              53,855
   Distributions payable to partners                                                            318,735             318,785
                                                                                       ----------------     ---------------

      Total Liabilities                                                                         585,026             514,702
                                                                                       ----------------     ---------------


PARTNERS' EQUITY:
   General Partners                                                                             582,038             661,502
   Limited Partners:
     Class A (54,027 Units outstanding)                                                       9,944,667          11,265,748
     Class B                                                                                  1,421,530           1,610,256
                                                                                       ----------------     ---------------

       Total Partners' Equity                                                                11,948,235          13,537,506
                                                                                       ----------------     ---------------

              Total Liabilities and Partners' Equity                                   $     12,533,261     $    14,052,208
                                                                                       ----------------     ---------------
                                                                                       ----------------     ---------------
</TABLE>


                 The accompanying notes are an integral part of
                           these financial statements.
                                       3
<PAGE>




                        PW PREFERRED YIELD FUND II, L.P.

                              STATEMENTS OF INCOME

             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                            1999                   1998
                                                                                     -----------------      -----------
<S>                                                                                  <C>                    <C>
REVENUE:
    Lease revenue                                                                    $       1,174,822      $      1,554,843
    Gain (loss) on sale of equipment                                                           287,952                (6,053)
    Interest income                                                                             15,436                35,217
                                                                                     -----------------      ----------------

         Total Revenue                                                                       1,478,210             1,584,007
                                                                                     -----------------      ----------------

EXPENSES:
    Depreciation                                                                               849,706             1,239,939
    Management fees (Note 2)                                                                    48,650                63,782
    Subordinated disposition fees (Note 2)                                                          --                 1,465
    General and administrative                                                                  82,905                38,821
                                                                                     -----------------      ----------------

         Total Expenses                                                                        981,261             1,344,007
                                                                                     -----------------      ----------------

NET INCOME                                                                           $         496,949      $        240,000
                                                                                     -----------------      ----------------
                                                                                     -----------------      ----------------
NET INCOME ALLOCATED:
   To the General Partners                                                           $          24,846      $         11,999
   To the Class A Limited Partners                                                             434,082               220,493
   To the Class B Limited Partner                                                               38,021                 7,508
                                                                                     -----------------      ----------------

                                                                                     $         496,949      $        240,000
                                                                                     -----------------      ----------------
                                                                                     -----------------      ----------------
NET INCOME PER WEIGHTED AVERAGE
   NUMBER OF UNITS OF CLASS A LIMITED
   PARTNER INTEREST OUTSTANDING                                                      $            8.03      $           4.08
                                                                                     -----------------      ----------------
                                                                                     -----------------      ----------------
WEIGHTED AVERAGE NUMBER OF
   UNITS OF CLASS A LIMITED PARTNER
   INTEREST OUTSTANDING                                                                         54,027                54,027
                                                                                     -----------------      ----------------
                                                                                     -----------------      ----------------
</TABLE>


                 The accompanying notes are an integral part of
                           these financial statements.
                                       4
<PAGE>




                        PW PREFERRED YIELD FUND II, L.P.

                              STATEMENTS OF INCOME

              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                            1999                   1998
                                                                                     -----------------      -----------
<S>                                                                                  <C>                    <C>
REVENUE:
    Lease revenue                                                                    $       3,640,208      $      4,482,319
    Gain (loss) on sale of equipment                                                            12,479               (18,073)
    Interest income                                                                             91,727               117,211
                                                                                     -----------------      ----------------

         Total Revenue                                                                       3,744,414             4,581,457
                                                                                     -----------------      ----------------

EXPENSES:
    Depreciation                                                                             2,443,967             3,666,822
    Management fees (Note 2)                                                                   152,323               188,131
    Subordinated disposition fees (Note 2)                                                          --                14,833
    General and administrative                                                                 132,117               105,066
                                                                                     -----------------      ----------------

         Total Expenses                                                                      2,728,407             3,974,852
                                                                                     -----------------      ----------------

NET INCOME                                                                           $       1,016,007      $        606,605
                                                                                     -----------------      ----------------
                                                                                     -----------------      ----------------
NET INCOME ALLOCATED:
   To the General Partners                                                           $          50,799      $         30,330
   To the Class A Limited Partners                                                             907,532               567,216
   To the Class B Limited Partner                                                               57,676                 9,059
                                                                                     -----------------      ----------------

                                                                                     $       1,016,007      $        606,605
                                                                                     -----------------      ----------------
                                                                                     -----------------      ----------------
NET INCOME PER WEIGHTED AVERAGE
   NUMBER OF UNITS OF CLASS A LIMITED
   PARTNER INTEREST OUTSTANDING                                                      $           16.80      $          10.50
                                                                                     -----------------      ----------------
                                                                                     -----------------      ----------------
WEIGHTED AVERAGE NUMBER OF
   UNITS OF CLASS A LIMITED PARTNER
   INTEREST OUTSTANDING                                                                         54,027                54,027
                                                                                     -----------------      ----------------
                                                                                     -----------------      ----------------
</TABLE>


                 The accompanying notes are an integral part of
                           these financial statements.
                                       5
<PAGE>




                        PW PREFERRED YIELD FUND II, L.P.

                         STATEMENTS OF PARTNERS' EQUITY

              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)



<TABLE>
<CAPTION>

                                                                      CLASS A               CLASS B
                                                 GENERAL              LIMITED               LIMITED
                                                PARTNERS             PARTNERS               PARTNER                TOTAL
                                            ----------------     ----------------      ----------------     ----------------

<S>                                         <C>                  <C>                   <C>                  <C>
Balance, January 1, 1999                    $        661,502     $     11,265,748      $      1,610,256     $     13,537,506
Net income                                            50,799              907,532                57,676            1,016,007
Distributions declared to partners                  (130,263)          (2,228,613)             (246,402)          (2,605,278)
                                            ----------------     ----------------      ----------------     ----------------

Balance, September 30, 1999                 $        582,038     $      9,944,667      $      1,421,530     $     11,948,235
                                            ----------------     ----------------      ----------------     ----------------
                                            ----------------     ----------------      ----------------     ----------------

Balance, January 1, 1998                    $        799,215     $     13,555,240      $      1,937,327     $     16,291,782
Net income                                            30,330              567,216                 9,059              606,605
Distributions declared to partners                  (130,263)          (2,228,613)             (246,402)          (2,605,278)
                                            ----------------     ----------------      ----------------     ----------------

Balance, September 30, 1998                 $        699,282     $     11,893,843      $      1,699,984     $     14,293,109
                                            ----------------     ----------------      ----------------     ----------------
                                            ----------------     ----------------      ----------------     ----------------
</TABLE>



                 The accompanying notes are an integral part of
                           these financial statements.
                                       6
<PAGE>




                        PW PREFERRED YIELD FUND II, L.P.

                            STATEMENTS OF CASH FLOWS

              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                               1999                1998
                                                                                        ----------------    -----------
<S>                                                                                     <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                                         $      1,016,007    $        606,605
     Adjustments to reconcile net income to net cash
       from operating activities:
         Depreciation                                                                          2,443,967           3,666,822
         (Gain ) loss on sale of equipment                                                       (12,479)             18,073
     Change in assets and liabilities:
         Rents and other receivables                                                            (160,794)            562,306
         Accounts payable and accrued liabilities                                                 12,950             (78,307)
         Payable to affiliates                                                                    (2,669)             19,195
         Deferred rental income                                                                   60,093              14,701
                                                                                        ----------------    ----------------

             Net cash from operating activities                                                3,357,075           4,809,395
                                                                                        ----------------    ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of equipment                                                                      (3,783,732)         (4,160,388)
   Proceeds from equipment sales                                                                 949,780             494,437
                                                                                        ----------------    ----------------

            Net cash used in investing activities                                             (2,833,952)         (3,665,951)
                                                                                        ----------------    ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Distributions paid to partners                                                             (2,605,328)         (2,605,278)
                                                                                        ----------------    ----------------

            Net cash used in financing activities                                             (2,605,328)         (2,605,278)
                                                                                        ----------------    ----------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                                     (2,082,205)         (1,461,834)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                               3,629,653           4,215,247
                                                                                        ----------------    ----------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                              $      1,547,448    $      2,753,413
                                                                                        ----------------    ----------------
                                                                                        ----------------    ----------------
</TABLE>




                 The accompanying notes are an integral part of
                           these financial statements.
                                       7
<PAGE>



                        PW PREFERRED YIELD FUND II, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1999
                                   (UNAUDITED)

1.       GENERAL

         The financial statements presented herein are prepared in conformity
with generally accepted accounting principles and the instructions for preparing
Form 10-Q under Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission and are unaudited. As such, these financial statements do not include
all information and footnote disclosures required under generally accepted
accounting principles for complete financial statements and, accordingly, the
accompanying financial statements should be read in conjunction with the
footnotes presented in the 1998 Annual Report. Except as disclosed herein, there
has been no material change to the information presented in the footnotes to the
1998 Annual Report.

         In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at September 30, 1999 and December 31, 1998 and results of operations
for the three and nine month periods ended September 30, 1999 and 1998 have been
made and are reflected.


2.       TRANSACTIONS WITH AFFILIATES

                        ACQUISITION AND OPERATING STAGES

         ACQUISITION OF EQUIPMENT Pursuant to its investment objectives, the
Partnership has acquired, on an all-cash basis, certain leased equipment from
Equis Financial Group L.P. ("EFG") (formerly American Finance Group or AFG), an
affiliate of the Managing General Partner.

         The purchase price of the equipment acquired from EFG is equal to the
lesser of the adjusted cost of the equipment or the appraised value of the
equipment at the time of its acquisition by the Partnership ("EFG carrying
value"). The adjusted cost of the equipment is equal to the price paid by EFG,
plus the cost of an appraisal, EFG's cost of interim financing for the equipment
and any taxes paid by EFG, less certain interim rentals received by EFG with
respect to the equipment.

         ACQUISITION FEE The Managing General Partner, or its affiliates,
receives or is entitled to receive a fee equal to (i) 2.25% of the purchase
price of equipment purchased with net offering proceeds from the sale of Units,
and (ii) 3% of the purchase price of equipment purchased with reinvested
Partnership cash flow as compensation for evaluating, selecting, negotiating and
consummating the acquisition of the equipment. Acquisition fees of $54,627 and
$110,206 were earned by the Managing General Partner during the quarter and nine
months ended September 30, 1999.




                                       8
<PAGE>




                        PW PREFERRED YIELD FUND II, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                   (CONTINUED)


         MANAGEMENT FEES The General Partners are entitled to receive a monthly
fee in an amount equal to 2% of gross rentals for Full Payout Leases, as defined
in the Partnership Agreement and 5% of gross rentals for other leases (payable
66.67% to the Managing General Partner and 33.33% to the Administrative General
Partner) as compensation for services rendered in connection with the management
of the equipment. Management fees of $48,650 and $152,323 were earned by the
General Partners during the quarter and nine months ended September 30, 1999.
Effective July 1, 1998, the Managing General Partner agreed to perform certain
administrative functions on behalf of the Partnership that previously had been
performed by the Administrative General Partner. For these services, the
Administrative General Partner pays the Managing General Partner an amount
equivalent to the fees otherwise due the Administrative General Partner.

         DISPOSITION FEES The General Partners, or their affiliates, were
entitled to receive a subordinated disposition fee in an amount equal to the
lesser of (i) 50% of the fee that would be charged by an unaffiliated party, or
(ii) 3% of the gross contract price relating to each sale of equipment (payable
50% to the Managing General Partner or its affiliates and 50% to the
Administrative General Partner) as compensation for negotiating and consummating
sales of equipment. During the fourth quarter of 1998, the Partnership reversed
previously accrued subordinated disposition fees because the General Partners
concluded that it was no longer probable that these subordinated disposition
fees would be paid. The Partnership has not accrued for subordinated disposition
fees during 1999.




                                       9
<PAGE>




ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Partnership and the Notes thereto. This
report contains, in addition to historical information, forward-looking
statements that include risks and other uncertainties. The Partnership's actual
results may differ materially from those anticipated in these forward-looking
statements. Factors that might cause such a difference include those discussed
below, as well as general economic and business conditions, competition and
other factors discussed elsewhere in this report. The Partnership undertakes no
obligation to release publicly any revisions to these forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of anticipated or unanticipated events.

YEAR 2000 ISSUE

     The Year 2000 Issue generally refers to the capacity of computer
programming logic to correctly identify the calendar year. Many companies
utilize computer programs or hardware with date sensitive software or embedded
chips that could interpret dates ending in "00" as the year 1900 rather than the
year 2000. In certain cases, such errors could result in system failures or
miscalculations that disrupt the operations of the affected businesses. The
Partnership uses information systems provided by EFG and has no information
systems of its own. EFG has adopted a plan to address the Year 2000 Issue that
consists of four phases: assessment, remediation, testing, and implementation
and has elected to utilize principally internal resources to perform all phases.
EFG has completed substantially all of its Year 2000 project at an aggregate
cost of less than $50,000, none of which was incurred by the Partnership. All
costs incurred in connection with EFG's Year 2000 project have been expensed as
incurred.

     EFG's primary information software was coded by a third party at the point
of original design to use a four digit field to identify calendar year. All of
the Partnership's lease billings, cash receipts and equipment remarketing
processes are performed using this proprietary software. In addition, EFG has
gathered information about the Year 2000 readiness of significant vendors and
third party servicers and continues to monitor developments in this area. All of
EFG's peripheral computer technologies, such as its network operating system and
third-party software applications, including payroll, depreciation processing,
and electronic banking, have been evaluated for potential programming changes
and have required only minor modifications to function properly with respect to
dates in the year 2000 and thereafter. EFG understands that each of its and the
Partnership's significant vendors and third-party servicers are in the process,
or have completed the process, of making their systems Year 2000 compliant.
Substantially all parties queried have indicated that their systems are Year
2000 compliant.

     Presently, EFG is not aware of any outside customer with a Year 2000 Issue
that would have a material effect on the Partnership's results of operations,
liquidity, or financial position. The Partnership's equipment leases were
structured as triple net leases, meaning that the lessees are responsible for,
among other things, (i) maintaining and servicing all equipment during the lease
term, (ii) ensuring that all equipment functions properly and is returned in
good condition, normal wear and tear excepted, and (iii) insuring the assets
against casualty and other events of loss. Non-compliance with lease terms on
the part of a lessee, including failure to address Year 2000 Issues, could
potentially result in lost revenues and impairment of residual values of the
Partnership's equipment assets.



                                       10
<PAGE>

     EFG believes that its Year 2000 compliance plan will be effective in
resolving all material Year 2000 risks in a timely manner and that the Year 2000
Issue will not pose significant operational problems with respect to its
computer systems or result in a system failure or disruption of its or the
Partnership's business operations. However, EFG has no means of ensuring that
all customers, vendors and third-party servicers will conform ultimately to Year
2000 standards and, therefore, the effect of this risk to the Partnership can
not be determined.


LIQUIDITY AND CAPITAL RESOURCES

     The Partnership commenced its equipment reinvestment phase during 1993 by
investing excess cash flows available after the payment of the distributions to
the partners in additional equipment. As of September 30, 1999, equipment
purchased pursuant to the reinvestment program, including acquisition fees and
expenses, totaled $26,657,934. Additional equipment will be purchased pursuant
to the reinvestment program which will end in either 1999 or 2000, at the
General Partners' discretion.

     The Partnership invests working capital and cash flow from operations prior
to its distribution to the partners or its reinvestment in additional equipment
in short-term highly liquid investments. These investments are primarily
short-term commercial paper issued by large domestic corporations. At September
30, 1999, the Partnership had approximately $1.1 million invested in commercial
paper and a fund that invests in similar instruments.

     Cash and cash equivalents decreased $2,082,205 from $3,629,653 at December
31, 1998 to $1,547,448 at September 30, 1999. This decrease primarily represents
the amount by which distributions to partners and cash used to purchase
equipment exceeded cash generated by operating activities and equipment sales.

     During the nine months ended September 30, 1999, the Partnership declared
distributions of cash flow received from operations in the amount of $2,605,278.
All distributions to the Class A Limited Partners represented an annualized
distribution rate of 11% of their contributed capital and all distributions to
the Class B Limited Partner represented an annualized distribution rate of 10%
of its contributed capital.

     Distributions may be characterized for tax, accounting and economic
purposes as a return of capital, a return on capital or both. The portion of
each cash distribution by a partnership, which exceeds its net income for the
fiscal period, may be deemed a return of capital. Based upon the amount of net
income reported by the Partnership for accounting purposes, approximately 59% of
the 11% cash distributions to the Class A Limited Partners for the nine months
ended September 30, 1999 constituted a return of capital. Additionally, since
inception, approximately 73% of the Class A Limited Partner's 11% cash
distributions constituted a return of capital. However, the total actual return
on capital over a leasing partnership's life can only be determined at the
termination of the Partnership after all residual cash flows (which include
proceeds from the re-leasing and sale of equipment after initial lease terms
expire) have been realized.


                                       11
<PAGE>


RESULTS OF OPERATIONS

     For the three and nine months ended September 30, 1999, the Partnership
recognized lease revenue of $1,174,822 and $3,640,208, respectively, compared to
$1,554,843 and $4,482,319 for the same periods in 1998. The overall decrease in
lease revenue from 1998 to 1999 was expected and resulted principally from
primary lease term expirations and the sale of equipment. The Partnership also
earns interest income from temporary investments of rental receipts and
equipment sales proceeds in short-term instruments.

     During the three months ended September 30, 1999, the Partnership sold
equipment having a net book value of $159,880 to existing lessees and third
parties. These sales resulted in a net gain, for financial statement purposes,
of $287,952 compared to a net loss in 1998 of $6,053 on equipment having a net
book value of $54,905.

     During the nine months ended September 30, 1999, the Partnership sold
equipment having a net book value of $937,301 to existing lessees and third
parties. These sales resulted in a net gain, for financial statement purposes,
of $12,479 compared to a net loss in 1998 of $18,073 on equipment having a net
book value of $512,510.

     It cannot be determined whether future sales of equipment will result in a
net gain or a net loss to the Partnership, as such transactions will be
dependent upon the condition and type of equipment being sold and its
marketability at the time of sale. In addition, the amount of gain or loss
reported for financial statement purposes is partly a function of the amount of
accumulated depreciation associated with the equipment being sold.

     The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time. EFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Partnership and which will
maximize total cash returns for each asset.

     The total economic value realized upon final disposition of each asset is
comprised of all primary lease term revenues generated from that asset, together
with its residual value. The latter consists of cash proceeds realized upon the
asset's sale in addition to all other cash receipts obtained from renting the
asset on a re-lease, renewal or month-to-month basis. The Partnership classifies
such residual rental payments as lease revenue. Consequently, the amount of gain
or loss reported in the financial statements is not necessarily indicative of
the total residual value the Partnership achieved from leasing the equipment.

     Depreciation expense for the three and nine months ended September 30, 1999
was $849,706 and $2,443,967, respectively, compared to $1,239,939 and
$3,666,822, for the same periods in 1998. For financial reporting purposes, to
the extent that an asset is held on primary lease term, the Partnership
depreciates the difference between (i) the cost of the asset and (ii) the
estimated residual value of the asset on a straight-line basis over such term.
For purposes of this policy, estimated residual values represent estimates of
equipment values at the date of primary lease expiration. To the extent that an




                                       12
<PAGE>

asset is held beyond its primary lease term, the Partnership continues to
depreciate the remaining net book value of the asset on a straight-line basis
over the asset's remaining economic life.

     Management fees were approximately 4.1% and 4.2% of lease revenue during
the three and nine months ended September 30, 1999, respectively, compared to
4.1% and 4.2% of lease revenue for the same periods in 1998. Management fees are
based on 5% of gross lease revenue generated by operating leases and 2% of gross
lease revenue generated by full payout leases.

     The General Partners, or their affiliates, were entitled to receive a
subordinated disposition fee in an amount equal to the lesser of (i) 50% of the
fee that would be charged by an unaffiliated party, or (ii) 3% of the gross
contract price relating to each sale of equipment (payable 50% to the Managing
General Partner or its affiliates and 50% to the Administrative General Partner)
as compensation for negotiating and consummating sales of equipment. During the
fourth quarter of 1998, the Partnership reversed previously accrued subordinated
disposition fees because the General Partners concluded that it was no longer
probable that these subordinated disposition fees would be paid. The Partnership
has not accrued for subordinated disposition fees during 1999.

     General and administrative expenses consisted primarily of investor
reporting expenses and transfer agent and audit fees.





                                       13
<PAGE>




                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         None.


ITEM 5.  OTHER INFORMATION

         None.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      None.

         (b)      The Partnership did not file any Forms 8-K during the third
                  quarter of the fiscal year ending December 31, 1999.





                                       14
<PAGE>






                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                      PW Preferred Yield Fund II, L.P.
                                      (Registrant)

                                      By:  General Equipment Management II, Inc.
                                           A General Partner

Date: November 4, 1999                By:  /s/ Carmine Fusco
                                           Carmine Fusco
                                           VICE PRESIDENT, SECRETARY,
                                           TREASURER AND CHIEF FINANCIAL
                                           AND ACCOUNTING OFFICER




                                       15